Shenzhen: The New Silicon Valley?

In 30 years, a tiny border town of 30,000 people, neighboring Hong Kong, has grown into a modern metropolis that can boasts of a population of 10 million residents. The development of Shenzhen is the epitome of China when it comes to reform and modernization.

But, can Shenzhen be the “Chinese Silicon Valley” after the development of 30 years?

In 1980, Shenzhen was established as one of China’s first special economic zones (SEZ), which coupled with China’s reform and opening-up policy, proposed by late Chinese leader Deng Xiaoping, offered privileged terms to foreign companies wanting to invest in China. Shenzhen, the cradle of the Chinese industrial revolution, has had significant influence on the Chinese economy since then. Overwhelming numbers of factories have been built by the sea, and many foreign companies have rushed into Shenzhen SEZ. Thousands of processing enterprises from all over the world have shifted their industries into Shenzhen, which has made Shenzhen the veritable “world factory.”

Nowadays, Shenzhen, a gateway for China to the outside world, is among the richest and most developed cities in China. As the nation’s economy roars ahead, the Gross Domestic Product (GDP) of Shenzhen grows, which in 2010 was the fourth highest in China following Hong Kong, Shanghai and Beijing. The high-tech, logistics, financial services and cultural industries are mainstays of Shenzhen. The city is referred to as one of the three financial centers of China, together with Shanghai and Beijing. Shenzhen has become the high-tech and manufacturing hub in southern China. The city of Shenzhen also has China’s fourth- busiest airport and the world’s fourth-busiest container port, as well as many popular tourist attractions. According to Chinese government statistics, the average annual salary in Shenzhen has surged by about 40 percent since 2000 to more than US$4,000, which is much higher than the national minimum wage of about US$2000 a year.

Some people still consider Shenzhen as the “world factory” because many sweatshops have been found there. Impoverished migrant workers and low quality production has resuilted in outside political pressure placed on China to move up the industrial ladder and implement new legislation that could shook the sweatshop model there.

At the beginning of this century, the Shenzhen government and academia made the proposal to transfer and upgrade the industries, eliminating industries that had lowvolume of production, big pollution issues, and no added value for Shenzhen.

Shenzhen is home to about 61 percent of local industries and these labor-intensive industries have been the backbone of Shenzhen’s economy. In addition, higher costs of labor and raw materials are undercutting the profit margins under the global financial crisis, which inevitably makes the situation even worse.

Where will Shenzhen go?

In recently years, many makers of low-end products have been trying their best to make the transition to more sophisticated products due to severe competition and low profit margins. Low- cost manufacturing is no longer the backbone of Shenzhen’s economy and the city of Shenzhen is changing
its mode of growth to emphasize quality of growth instead.

In 2009, Shenzhen mapped out plans to promote the development of three new industries- biotech, new energy and Internet, which soon became the fundamental industries for economic growth. Growth speed reached 30 percent, 24.2 percent and 29.3 percent respectively in 2010. In addition, Shenzhen government has promised tax breaks and land concessions to high- tech firms, and is investing $1.25 billion over the next few years in high-tech companies and research projects.

While Shenzhen is heading in the direction of an international, innovative city, it needs talented people from local and overseas- Hong Kong and across the world. In 2011, “Shenzhen Peacock Plan” was introduced by the Shenzhen government to encourage Chinese overseas talents to come back by promoting the development of pillar industries in China. The aim was to specifically recruit and support 50 or more high-level overseas talent teams and 1,000 or more high- level overseas talents to establish
businesses and innovate in Shenzhen within the next five years, and attract and lead 10,000 or more overseas talents from various fields to work in Shenzhen, which could build Shenzhen into an actively innovative and enterprising city in the Asia- Pacific region, and one that attracts the gathering of high-level international talents, according to the Shenzhen city government.

Richard Suder, the founder of Chinese Overseas Talent Pool Organization said there was a possibility for Shenzhen to be the Chinese Silicon Valley in the future. “Chinese Academy of Sciences- Shenzhen Advanced Institute of Technology has been trying to do some research and recruit talented people,” he said. “However, it takes time and depends on the government support and funds.”

A vivid illustration of a dynamic past in China, The House Baba Built is another masterpiece from Caldecott-winning artist Ed Young, which documented his childhood in Shanghai through some old family pictures, simple drawings and wild collages.